Upholding the Sanctity of the Attorney-Client Privilege

The Wisconsin Supreme Court's 2004 Sampson decision established with certainty that the client owns and controls the attorney-client privilege. This clear decision should produce many positive results for clients, practitioners, and the state judicial system.

Upholding the Sanctity of the Attorney-Client Privilege

The Wisconsin Supreme Court's 2004 Sampson decision established with
certainty that the client owns and controls the attorney-client
privilege. This clear decision should produce many positive results for
clients, practitioners, and the state judicial system.

he attorney-client privilege is a long- established part of
the common law in Wisconsin.1 It also is
recognized in the attorneys' oath2 and
embodied in the Rules of Professional Conduct,3 Wisconsin statutes,4
and Wisconsin case law.5 The policy behind
the rule is based on the recognition of the value of legal advice and
assistance obtained through full disclosure of the facts and the
corollary that full disclosure to counsel often will be unlikely if
there is fear that other persons can compel a breach of confidences. As
the Wisconsin Supreme Court stated as early as 1900:

"It is essential to the ends of justice that clients should be safe
in confiding to their counsel the most secret facts, and to receive
advice and advocacy in the light thereof without peril of publicity.
Disclosures made to this end should be as secret and inviolable as if
the facts had remained in the knowledge of the client alone."6

Disputes have arisen, however, over whether an unauthorized
disclosure by counsel of a privileged communication waives the
attorney-client privilege. Most frequently these disputes arise during
litigation when documents are produced during discovery. Other
jurisdictions have addressed the issue applying a variety of rules.

Before the Wisconsin Supreme Court's recent decision in Harold
Sampson Children's Trust v. Linda Gale Sampson 1979 Trust,7 it was undecided in Wisconsin whether an
unauthorized disclosure of a privileged communication waived the
attorney-client privilege. Well-established Wisconsin case law preceding
this decision states that the privilege belongs to the client and only
the client can waive the attorney-client privilege.8 However, the pre-Sampson cases addressed
situations in which the privilege was asserted and no privileged
communications were disclosed.

The Sampson decision addresses disclosure without the
assertion of privilege when the client is unaware of the disclosure and
the attorney discloses the information without authority. The Wisconsin
Supreme Court held in Sampson that the privilege is not waived
when a lawyer makes an unauthorized disclosure of a privileged
communication. That holding is consistent with Wis. Stat. section
905.03, which provides:

"A client has a privilege to refuse to disclose and to prevent any
other person from disclosing confidential communications made for the
purpose of facilitating the rendition of professional legal services to
the client...."

This decision is important for all Wisconsin practitioners because
unauthorized disclosures can occur in a myriad of ways and have adverse
consequences for the client. Counsel, when culling through documents to
determine what should be produced, can overlook a privileged document
due to oversight or a miscommunication between lawyer and client. A
briefcase containing privileged documents can be lost or stolen. A
document intended for a client can be sent to opposing counsel because
the wrong fax number is used. Privileged documents can be copied for
production due to a misunderstanding of copying instructions or post-it
notes falling off of the privileged documents. A single mistake can have
a significant impact on a client whose communications have been
disclosed.

The Underlying Dispute

The Sampson case arose out of the liquidation of various
properties held by trusts whose beneficiaries are members of the Sampson
family. Disputes arose regarding the valuation of these properties, the
accounting methods used for capital improvements and rental income, and
the amount of the proceeds to be disbursed. Beth Bauer, one of the
trust's beneficiaries, created a series of documents for counsel
explaining the complicated transactions and disclosing her thoughts and
analysis concerning liability, supporting evidence, and damages.

The Harold Sampson Children's Trust and its beneficiaries retained an
attorney to represent them in a resolution of these issues. Bauer gave
privileged documents to the attorney to assist in his analysis of the
issues and claims and his representation of the parties. Litigation was
commenced and requests for discovery from opposing counsel followed
shortly thereafter.

At the attorney's request, Bauer gathered documents she believed were
responsive to the document requests and put them in a box that she then
delivered to the attorney. She made sure that none of the privileged
documents she had created were in the box.

However, the attorney responded to the defendants' discovery requests
by producing both privileged and nonprivileged documents. The attorney
did not advise his clients that he had produced privileged documents.
The attorney later moved to withdraw as counsel for reasons unrelated to
the production of documents.

Cook & Franke S.C. ("the firm") was substituted as counsel for
the attorney who withdrew. Shortly after obtaining the file, the firm
discovered that attorney-client privileged documents might have been
produced to opposing counsel. The firm investigated and determined that
in fact privileged documents were produced without the client's consent.
The attorney who had produced the privileged documents acknowledged that
he had no authority to waive the attorney- client privilege and that the
privilege belonged to the client.

The firm notified the defendants' counsel of its concern that
privileged documents had been produced by the previous attorney. The
defendants' counsel refused to return the documents or to allow access
to the documents so the firm could determine if other attorney-client
privileged documents were produced.

The firm filed a motion to compel seeking the return of the attorney-
client privileged documents and an order precluding use of the
documents. The circuit court referred the issue to a discovery master to
hold an evidentiary hearing to determine if the documents were
privileged and if the attorney-client privilege had been waived. At the
hearing the circuit court stated "... the lawyers can't waive
attorney/client privilege for their client. It has to be the
client."

After taking testimony and hearing the lawyer's argument, the
discovery master found the documents were privileged, that the clients
did not give permission or consent to produce the
attorney-client-privileged documents, and that the clients were not
aware that the first attorney had produced the
attorney-client-privileged documents until the new firm discovered the
disclosure. Despite these findings, the discovery master determined that
the privilege was waived by the attorney's intentional production of the
documents.

The plaintiffs, including Bauer, filed an objection to the discovery
master's findings of fact and conclusions of law, decision, and order.
The circuit court adopted the discovery master's findings of fact but
reversed the discovery master's legal conclusions and held that the
attorney could not waive the attorney-client privilege without the
consent of the client because it was undisputed that the client did not
consent to waiver of the privilege. The circuit court ordered the
documents returned to the plaintiffs.

The defendants filed a petition for leave to appeal a nonfinal order.
The petition was granted, and the court of appeals reversed the circuit
court, concluding that counsel has authority based on agency principles
to waive the privilege by virtue of the delegation of discovery
responsibilities to counsel. The court of appeals further concluded that
the rule that waiver is an intentional relinquishment of a known right
does not apply to evidentiary privileges. Judge Wedemeyer dissented on
the basis that in Wisconsin only the client can waive the
attorney-client privilege and the court of appeals had no authority to
modify that rule.

The Wisconsin Supreme Court Decision

The Wisconsin Supreme Court reversed the court of appeals, relying on
four rules: 1) Wis. Stat. section 905.03(1)(d), which defines a
confidential communication; 2) Wis. Stat. section 905.03(2), which sets
forth the general rule on attorney-client privilege and states that the
client may refuse to disclose or prevent others from disclosing a
confidential communication; 3) Wis. Stat. section 905.03(3), which
states that the privilege belongs to the client; and 4) Wis. Stat.
section 905.11, which governs waiver of the privilege by a voluntary
disclosure.

The supreme court found that the disclosure was voluntary and not
inadvertent. Because the disclosure was voluntary, the court concluded
that other jurisdictions' rules relating to "inadvertent" disclosures
did not apply. Based on the rules, the case law, and the policies behind
the privilege, the court held that only the client may waive the
privilege because the client holds and controls the privilege. The court
declined to hold the client responsible for the attorney's actions under
agency principles, because of the importance of protecting the integrity
of the attorney-client privilege.9

Inadvertent Disclosures

While the supreme court did not reach the issue of inadvertent
disclosures, other courts that have addressed the issue applied a
"lenient" test, a "strict responsibility" test, and a "middle" or
"balancing" test. The lenient test weighs heavily against waiver, while
the strict test provides that any disclosure constitutes a waiver. The
middle or balancing rule applies a five-factor test to determine if the
privilege is waived. Those factors are: 1) the reasonableness of the
precaution taken to prevent inadvertent disclosure; 2) the number of
inadvertent disclosures; 3) the extent of the disclosure; 4) the
promptness of measures taken to rectify the disclosure; and 5) whether
the overriding interests of justice would or would not be served by
relieving the party of its error.10

The majority of state courts apply the lenient test. Under this test,
waiver can occur only if there is knowledge of the existence of the
right and intention to relinquish the right by the party's knowing and
intentional act.11 Attorney-client
communications are absolutely protected regardless of whether such
communications are voluntarily, surreptitiously, or otherwise obtained
by third parties.12 A waiver must be
express and knowing such that even if counsel discloses a confidence in
the client's presence, there is no waiver unless the client expressly
consents to the disclosure.13 Moreover, if
an attorney violates the duty of confidentiality, there is no waiver of
the privilege.14 The right of the client to
prevent the attorney from disclosing matters covered by the
attorney-client privilege arises at the inception of the
relationship,15 and inadvertent disclosure
cannot and does not constitute waiver of the attorney-client
privilege.16 Inadvertently produced
documents that are otherwise protected by attorney-client privilege
remain protected.17 The lenient test finds
that absent express consent, it is not within the power of the client's
attorney to waive the privilege.18 Thus,
the attorney-client privilege is not waived by counsel's inadvertent
disclosure of a file, since the client as holder of the privilege had no
opportunity to claim the privilege.19

Similarly, a variety of federal courts have adopted the lenient rule.
For instance, federal courts have ruled that the mere inadvertent
production by an attorney does not waive the client's privilege.20 The underlying reasoning for the lenient rule is
that it protects the client from an apprehension that consultations with
legal advisors will be used against the client if the privileged
communication is inadvertently disclosed, and the rule applies the
privilege in a way that is predictable and certain.21 Courts have held that inadvertent disclosure by
counsel does not waive the privilege because the privilege can be waived
only by the client's intentional relinquishment of the privilege.22 Mere inadvertent production does not waive the
privilege.23 "If we are serious about the
attorney-client privilege and its relation to the client's welfare, we
should require more than such negligence by counsel before the client
can be deemed to have given up the privilege."24

A minority of courts apply the strict responsibility test.25 Many other courts, however, have applied the
middle or balancing test.26

Nelson

Schlict

Steven L. Nelson,
Marquette 1990, is a shareholder with Cook & Franke S.C.,
concentrating in complex litigation, construction disputes, architect
and engineer liability, OSHA, contract disputes, Wisconsin Fair
Dealership Law, and entertainment law. He is a member of the American
Board of Trial Advocates – Wisconsin Chapter, Civil Trial Counsel
of Wisconsin, the Wisconsin Academy of Trial Lawyers, and the American,
Wisconsin, and Milwaukee bar associations. He is chair of the
Make-A-Wish Foundation of Wisconsin.

Jane C. Schlicht,
Marquette 1983 summa cum laude, is a shareholder with Cook & Franke
S.C., concentrating in complex business and commercial disputes and
intellectual property. She is a member of the Milwaukee, Wisconsin,
American, 7th Circuit, and Federal Circuit bar associations and The
Outstanding Lawyers of America. She is a member of the Fairchild
American Inns of Court, one of the authors of Contract Law in Wisconsin
(State Bar CLE Books), and a coauthor of Offers of Settlement in
Wisconsin Diversity Actions: Opening the Doors to the Plaintiffs
(Wis. Law., October 1996).

Guidelines for Practitioners

The Sampson decision should not encourage carelessness in
the review of documents before production or in the treatment of
privileged communications. The holding is meant to protect the client
and minimize damage by unauthorized disclosures. Even if the privilege
is not waived, the problem remains that information cannot be erased
from the recipient's mind.

The following practice pointers, some of which pertain to issues in
Sampson, were developed as a result of the extensive research
conducted during the case.

1) Documents generated by counsel that are privileged should bear a
legend such as "Attorney-Client Privilege," so they can be readily
identified as privileged documents.

2) Advise clients to label as an attorney-client privileged document
each page of any memos, summaries of positions, or other documents that
are prepared to assist the lawyer. This alerts everyone to the nature of
the document and makes the document easier to identify should any
documents be produced in error.

3) When feasible, attorney-client privileged documents should be
segregated or maintained in a separate folder or file distinct from the
balance of the documents.

4) Attorneys must thoroughly review documents to identify any
documents protected by the attorney-client privilege before they are
produced to a third party.

5) When an attorney meets with a client to determine what documents
should be produced, the attorney should instruct clients to segregate
any attorney-client privileged documents from the others. Such documents
include not only communications to the attorney who is representing the
client in the immediate action, but also communications with any other
attorneys who previously may have been involved. Because this practice
is not foolproof, counsel still must carefully review the documents
after receiving them from a client.

6) If there is any uncertainty when reviewing documents, the attorney
should consult with the client to determine if the documents are
protected by the attorney-client privilege.

7) When producing documents pursuant to discovery requests, it is
helpful if the lawyers for all parties agree before the production that,
if an attorney or a staff member sees what appears to be or may be an
attorney-client communication, the attorney should immediately notify
the producing attorney and inquire as to whether the communication is
privileged and intended to be protected. While some attorneys may think
that by so agreeing they are doing the work of the producing attorney,
in cases in which large quantities of documents are being produced and
privileged documents can be missed, such an agreement helps all
parties.

8) If the producing lawyer discovers that a privileged document was
produced, the lawyer should immediately demand in writing the return of
all copies of the document and the destruction of any notes or memos
created concerning that document. The producing lawyer also should
insist that the receiving lawyer provide written confirmation that the
privileged document was returned and that any related notes and memos
were destroyed.

9) If an attorney receives an unauthorized attorney-client
communication, such as a document inadvertently faxed by opposing
counsel or an email forwarded by opposing counsel that is intended for
his or her client, the receiving attorney should notify the sender
immediately and ask for direction as to what do with the document. This
is consistent with ABA Formal Opinion 92-368 and with the
Sampson decision.

10) The increased use of email communications presents its own
challenges. Email communications between client and counsel should be
limited to that group alone. There are too many opportunities for errors
when selected emails are sent to individuals outside the intended group
of recipients. If the client or counsel inadvertently clicks "reply to
all" instead of simply replying to the client or counsel, multiple
attorney-client communications could be disclosed. Unlike faxes, emails
can be called back before they are opened, and this step should be
attempted immediately. When emails cannot be recalled, the attorney
should contact the counsel for those individuals who inadvertently
received the communication, assert the attorney-client privilege, and
demand immediate destruction of the email and the return of all copies
of documents.

Conclusion

The Sampson decision should produce many positive results
for clients, practitioners, and the Wisconsin judicial system. The
decision establishes certainty that the client owns and controls the
attorney-client privilege. It diminishes the harm of an unauthorized
disclosure, since the attorney who receives the information must return
it and may not use it. A definitive rule will reduce litigation over the
waiver of the privilege. Further, the ethical principles governing
lawyers are reinforced by a rule that does not promote the retention and
use of information to which the receiving attorney has no right.